Tuesday, September 8, 2009

How American Health Care Killed My Father

When I saw the title of the health care story in the current issue of The Atlantic:

How American Health Care Killed My Father by David Goldhill

I expected a horror story that ended with a desperate call for a single-payer solution. My suspicions were intensified when Goldhill identified himself as a Democrat!

Instead I found a well-reasoned, long and detailed analysis of problems with American health care that I mostly agreed with, plus a solution approach that has some merit, though I do not buy it completely.

I strongly recommend you read it all at http://www.theatlantic.com/doc/200909/health-care

In brief, Goldhill's 83 year-old father checked into "a well-regarded nonprofit hospital in New York City" with a case of pneumonia. Some weeks later, he went out feet first, dead from a hospital-acquired infection. His wife received a bill for over $636,687.75, all but about $992 paid by insurance.

Goldhill blames the hospital, of course, for the hospital-acquired infection. Clearly, some doctor or health-care worker failed to properly wash his or her hands. However, he does NOT take the conventional "lesson" that more government regulation and rules would have solved the problem. Nor does he blame the insurance company and Medicare for a lack of monitary support in this case. Quite the contrary, he blames the availability of Medicare and insurance money for both the high cost and lack of quality of American health care!

Please read the whole story, but here is the final part:

Ten days after my father’s death, the hospital sent my mother
a copy of the bill for his five-week stay: $636,687.75. He was charged $11,590
per night for his ICU room; $7,407 per night for a semiprivate room before he
was moved to the ICU; $145,432 for drugs; $41,696 for respiratory services. Even
the most casual effort to compare these prices to marginal costs or to the costs
of off-the-shelf components demonstrates the absurdity of these numbers, but why
should my mother care? Her share of the bill was only $992; the balance,
undoubtedly at some huge discount, was paid by Medicare.

Wasn’t this an extraordinary benefit, a windfall return on American
citizenship? Or at least some small relief for a distraught widow?

Not really. You can feel grateful for the protection currently offered
by Medicare (or by private insurance) only if you don’t realize how much you
truly spend to fund this system over your lifetime, and if you believe you’re
getting good care in return.

Would our health-care system be so outrageously expensive if each
American family directly spent even half of that $1.77 million that it will
contribute to health insurance and Medicare over a lifetime, instead of
entrusting care to massive government and private intermediaries? Like its
predecessors, the Obama administration treats additional government funding as a
solution to unaffordable health care, rather than its cause. The current reform
will likely expand our government’s already massive role in health-care
decision-making—all just to continue the illusion that someone else is paying
for our care.

But let’s forget about money for a moment. Aren’t we also likely to get
worse care in any system where providers are more accountable to insurance
companies and government agencies than to us?

Before we further remove ourselves as direct consumers of health
care—with all of our beneficial influence on quality, service, and price—let me
ask you to consider one more question. Imagine my father’s hospital had to
present the bill for his “care” not to a government bureaucracy, but to my
grieving mother. Do you really believe that the hospital—forced to face the
victim of its poor-quality service, forced to collect the bill from the real
customer—wouldn’t have figured out how to make its doctors wash their

A few weeks ago I posted We Need COST-EFFECTIVE Health Care Reform, in which I called for three basic changes:

1) Universal digititized patient data, securely accessible by any doctor chosen by the patient. This part should be easy to sell to both political parties and all medical specialties. It has been technically feasible for a decade an it is past time we do it.

2) Tort reform to eliminate high malpractice premiums and defensive medicine with unnecessary tests that add up to 10% to costs. This will be a hard sell to the majority party that is in the pocket of trial lawyers.

3) Outcome-based reimbursement to eliminate costly surgery and medications that do not yield comparative effectiveness based on quality-adjusted life years. This will be a hard sell to the minority party, some of whose members originally proposed it but who have backed away due to the onslaught of opposition based on "pulling the plug on granny".

After reading the above story, I would add the following:

4) Mandatory Catastrophic Insurance coverage for all that would cover only medical costs incurred in any one year of over $50,000 or a chronic condition that incurs costs of over $5,000 per year for ten years. That coverage would include a voucher for a basic checkup once a year. The government would subsidize coverage for those who could not afford the relatively low premiums for catastrophic coverage. Goldhill estimates a yearly premium of $2,000 for this type of coverage. (By comparison, my wife and I are paying around $10,000 each if you include our out-of-pocket insurance and Medicare costs plus the contribution of my former employer and of government Medicare funding.)

5) Mandatory Health Savings Accounts for all that would be tapped into for actual medical costs incurred, but would remain the property of the owner of the account (you, or your heirs) if not fully expended. Employers and employees/retirees would pay into the Health Savings Accounts the difference between what they are currently paying for comprehensive insurance and out-of-pocket medical costs now and the lower cost of Catastrophic-only insurance. (For example, my wife and I would see about $8,000 per year for each of us pass into our Health Savings Accounts.) Young, healthy families with low medical expenditures would see their Health Savings Accounts grow by thousands of dollars per year, accruing as savings to prepare themselves for the likely increasing medical costs as they age. Those not so fortunate, who incur medical costs, would expend the funds in their Health Savings Accounts until the accounts were tapped out, and would then pay the remainder out of their pockets and savings, until they hit the catastrophic limits and then Catastrophic-only insurance would kick in.

The point would be to make the recipients of health care more conscious of the actual costs. Instead of calling an ambulance for every event, they would be more likely to drive the injured person to the hospital or use public transit if possible. Instead of accepting the first doctor's advice for expensive medicines or tests or procedures (that may be in the doctor's self-interest - he or she may have a boat payment due) they would be more likely to shop around for lower-cost options. That would drive down the costs of medical care for everybody and make the providers more responsive to their customers, who would be the actual recipients of health care rather than the government and insurance companies.
Ira Glickstein


Howard Pattee said...

Ira’s point that we need, “to make the recipients of health care more conscious of the actual costs” is valid, and his expectation that as a consequence, “they would be more likely to shop around for lower-cost options” may be true, but a sick patient’s decision is not likely to be safe or long-term cost effective unless this decision is rational ― not likely if you are sick. You need the guidance of a primary care physician who is quickly available.

In our totally disorganized health system, the three major participants — providers, payers, and patients — each does what is in their best interest without concern for good of the whole. This is the
Tragedy of the Commons.

The only way to avoid this ultimately tragic self-interest is to accept some degree of organization or supervision of the whole ― a concept that free-market ideologist will not accept. The fact is that all of the research funded by government agencies like the NIH are guided by experts (peer review).

Under a free-market system, primary care physicians are disappearing. Only by some government intervention as in the case of the British NHS can the Tragedy of the Commons be ameliorated.

Ira Glickstein said...

Thanks for your comment Howard. Did you read the whole story in The Atlantic?

Today decisions are made REGARDLESS of cost-benefits. Since "someone else" is paying, the patient and his or her family say "do all you can, Doc." The Doctor/Hospital, desiring more income, scheme to do as much as possible within the rules imposed by the insurance company and Medicare. The insurance company (and Medicare) try to reduce expenses by delay, delay, delay.

The patient/family have no idea how effective alternatives are and don't care what they cost. If you read what David Goldhill writes, the ONLY way to reduce overall health costs is to use insurance the way it works -for catastrophic events only- as we do for fire insurance, for example. Regular health care should be accountable to the recipient. Health Savings Accounts would incentivize many recipients to become more cost-conscious and that would help drive down costs for everyone.

The alternative, as President Obama said this evening, is for health costs to rise to 50% of GDP. His analysis is right but his solution is moving in the totally wrong direction. (Reminds me of the guy with square wheels. They were bumpy, so he changed to triangular wheels to remove one of the bumps.)

Ira Glickstein

JohnS said...

Ira, I have read your referenced article and have saved his conclusions for further discussion, maybe. In summary, your comments are a possible intermediate step toward a system modeled after David Goldhill recommendations. However, after considering your and his recommendations and Obama’s speech last night, I’ve concluded that discussing alternatives on health care coverage is as futile as arguing on the number of angels that fit on the head of a pin. Can you imagine the furor from the media and the opposing party? “The government is going to force you to buy your own health care! Rant, Rant, Rant” Wails and moans about every aspect of the proposal. Logic cannot prevail in today’s controversial, confrontational atmosphere. Nothing will fly, with the exception that the dominant democratic administration may pass something, good or bad, because Obama wants it and to spite the republicans who oppose the plan.

Howard Pattee said...

Ira, I agree with your first four requirements for cost-effectiveness.
1) Universal digitized patient data
2) Tort reform
3) Outcome-based reimbursement
4) Mandatory Catastrophic Insurance

But Goldhill must be a liberal theoretician, or from another planet if he thinks his radical ideas have any realistic chance of being enacted. Even if they were tried as a local experiment, I think they would fail.

I have no evidence that patients can make wise medical decisions. On the contrary, my experience is that “He who is his own lawyer has a fool for a client” holds for medical care. Even sick doctors know enough to get objective diagnosis. A personal primary care physician who knows your history is the essential first step.

I peruse the New England Journal of Medicine (to which I linked) and have many doctor friends of differing political views. They all agree that cost reduction requires limiting care. Otherwise, there is simply no limit to the cost of applying all the wonders of technology to all patients. While this fact is obvious, the implementation of limiting care is daunting. They also agree that the primary care physician is crucial in this process. Under the present system with over-burdened or missing primary care physicians it is often safest (at least legally) to pass responsibility of a patient to a specialist without adequate consultation.

Goldhill even admits that, “Many experts oppose the whole concept of a greater role for consumers in our health-care system. They worry that patients lack the necessary knowledge to be good consumers” [and certainly good diagnosticians]. He fears, “that unscrupulous providers will take advantage of them, that they will overspend on low-benefit treatments and under-spend on high-benefit preventive care.” He says, “They are right.”

Ira Glickstein said...

To John and Howard:

Yes, John, there will be political ranting. Both sides are lying and misstating the facts. No one will admit we really need rational rationing, using "quality-adjusted life years" and "comparative effectiveness research". For example, then President-Elect Obama's grandmother received a hip replacement mere WEEKS before she passed away. I don't know if this extensive and invasive surgery on a very old and frail woman speeded her death or not, but it was wrong, wrong, wrong. It is bad enough if she got approved because she was related to a prominent person. It would be even worse if we are giving hip relacements to every grandmother in her condition! This is an example of why the current plan (and all the new plans) are doomed to be unsustainable. The Democrats are not allowed to use the word "rationing" and the Republicans are shouting "pulling the plug on granny".

However, "It is better to light a single candle than to curse the darkness." Let there be peace on Earth and let it begin with us!


I think, Howard, you and I are in agreement again, at least on four out of my five items, and probably half of the fifth. Let us work on #5, Health Savings Accounts that belong to the individual.

Yes, the sick person and his or her family will need help from a medical professional in making decisions.

Each of us has purchased high-tech electronics and few of us are experts, so we consult people who are. My wife and I have helped friends and neighbors purchase PCs and laptops. My wife is an expert on digital cameras and has helped others. In each case, we ask about cost-sensitivity and expectations as to use, and tailor our recommendations accordingly.

What is the last time you discussed cost with your primary care doctor? Did you (or even he or she) know the cost of the alternatives? Probably not. You just asked for the most that could be done that would pass muster with Medicare.

As you wrote in an earlier thread, if someone has a health event at the retirement facility where you live, they call an ambulance. If the person was paying for transport out of their pocket, how many would get a friend to drive them or take a taxi? my wife was at a restaurant recently and a woman in her party slipped. The restaurant insisted that an EMT be called. We do not object because "emergency medical care is covered". SOMEONE ELSE IS PAYING!

Yes, there will be cases where EMTs are not called and the patient dies. But, lots of people die every day, and there is bound to be some "friction" in any system.

Last month I mentioned President Obama's April NY Times interview. Obama's opinion is (or was as of last April) that we should limit major cost surgeries for the aged and chronically or terminally ill, BUT, if they have the money or their children or grandchildren are rich (like Obama) it is OK to pay for major cost items with private money! I AGREE!

He said it is NOT a "sustainable model" if paid for out of public money because, in Obama's words "The chronically ill and those toward the end of their lives are accounting for potentially 80 percent of the total healh-care bill out here."

Obama spoke of "tribunals" that would set standards for cost-effective care, taking the above into account. I don't like to call them "death panels" but they are "end of life tribunals" that will (and IMHO should) set limits on when we pay, out of public funds such as Medicare, for expensive treatment for the chronically/terminally ill rather than prescribe palliative treatment.

The proper role for the government IMHO is to mandate minimum levels of catastrophic insurance (my item #4) and Health Savings Accounts (my #5) and then have tribunals of medical experts, using actuarial data and quality of life standards, set end of life guidelines for treatment of the chronically and terminally ill.

Ira Glickstein